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Ecuador High Court Rejects
Repsol's Accusations of Fraud

By

Maria Elena VerdezotoDow Jones Newswires

Updated Aug. 29, 2002 9:44 a.m. ET

QUITO, Ecuador -- The president of Ecuador's Supreme Court has rejected the accusations of graft that an official from Spanish-Argentine conglomerate
Repsol-YPF SA
had leveled against the country's judiciary and civil servants.

In a press conference Wednesday, Armando Guerrero not only rejected the corruption charges, but asked that Eliseo Gomez, Repsol-YPF's country manager for Ecuador, put the accusations in writing and support them with evidence. He also invited Mr. Gomez to appear in his chambers later Wednesday.

Ramiro Larrea, the president of the Commission for the Civic Control of Corruption, also asked Mr. Gomez to appear at the commission's offices Thursday for the same purposes. The commission has already opened an investigation into the charges.

Late Wednesday, Mr. Gomez backed off a bit from his accusations, saying they were "personal reactions" given in an impromptu press conference and "weren't thought out."

"My words were the consequence of the frustrations that we have had with the bureaucratic obstacles toward completing our projects, which would benefit the country," he said in a written statement.

The day before, Mr. Gomez had said: "It would be impossible to mention names, but in my directory I have a list of more than 100 officials of this type. In Ecuador the decisions are an auction, and who pays the most wins." He also said "in almost all of Ecuador's public institutions there are officials who only occupy themselves with obstructing the work of foreign companies."

Repsol-YPF belongs to an international consortium that's building a 500-kilometer, $1.1 billion oil pipeline in the Andean country. The project is supposed to be finished by next July at the latest, but the OCP consortium complained in June that it had racked up $1.2 million in losses linked to public protests.

Maria de los Angeles Mantilla, the OCP's spokeswoman, said Mr. Gomez's comments weren't made on the consortium's behalf.

Mr. Gomez, a Spaniard who will be replaced next week as Repsol-YPF's country director by Carlos Arnao of Ecuador, met with Energy Minister Pablo Teran Wednesday morning. On his way into the meeting he reiterated to reporters that a lack of legal protections hampers foreign investment in the country.

Repsol-YPF and the state of Ecuador have been at odds since the beginning of the year over a payment that Ecuador's Comptroller General says the company still owes the country.

Comptroller General Alfredo Corral has said that between 1997 and 2000 Repsol-YPF paid a tariff of $1.02 per barrel transported through Ecuador's main oil pipeline, the SOTE, when it should have paid $1.50 in 1997 and $1.80 in 1998, according to the contract it had signed with state-owned oil company Petroecuador.

Petroecuador determined that the company owes it $60.6 million. Other foreign oil companies that were also found to have underpaid have already reimbursed Petroecuador.

Repsol-YPF has offered to pay up to $25 million, but the offer was rejected by the Comptroller General. The company has appealed, and the case is still pending.

YPF has had a presence in Ecuador since 1995, operating oil fields in Block 16 of the Amazonia state which produce about 26,000 barrels a day. It also has 117 gas stations in the Andean nation.

Ecuador High Court Rejects
Repsol's Accusations of Fraud

QUITO, Ecuador -- The president of Ecuador's Supreme Court has rejected the accusations of graft that an official from Spanish-Argentine conglomerate Repsol-YPF SA had leveled against the country's judiciary and civil servants.